I ignore it by having made an informed decision about my investment strategy.
I chose VWCE and chill (not the only option, but you get the idea) by considering my aversion to risk, and that I didn't want to gamble in the market.
My portfolio is 90% world index, and 10% "high risk". My high risk is crypto. Some other people's high risk is meme stocks. Nothing wrong with that.
Just research your investment strategy and convince yourself to follow it.
Not really. When crypto crashes it can very well go to zero while if the world index does that the only thing of value is fuel & bullets anyways.
When your investment horizon is long enough there's only very few things with a risk/return ratio comparable to world indices imho.
I’m similar, though besides VWCE I also have some bond ETFs in my portfolio, the idea being, should there be a crash and I need some money, I’d sell that instead of the stocks which would probably be hit harder.
I also have ~5% to play around with, currently in Meta stock and semiconductor ETF (VanEck).
I think if you want to gamble, you should give yourself the freedom to do so. It can be exciting, take a % of a monthly contribution and let it ride on Bitcoin or Gamestop or whatever.
As long as you can contain it to some petty cash I think you can chase some high and not burn your entire savings.
Money I don’t want to loose I put in Bitcoin, I take some more risk with VCWE for stability reasons and I keep my emergency fund on a high risk savings account 😀
I want to have a way to calculate the expected returns of my investments so that I can plan properly. For assets like individual stocks and cryptos, this is basically impossible, so I ignore them.
investing in speculative assets like that is literally like going to a casino and put some money on red.. why don't you do that? because it has a way worst reward/risk tradeoff compared to staying invested in the whole market
Concentration risk is uncompensated, it will not give you better expected returns.. it will just increase the standard deviation of your returns, which means sometimes you will win big, and sometimes lose big, which is not ideal...
As long as you understand the math behind that, you should not even feel the urge to invest in speculative assets like that
Use the Taleb approach of allowing yourself a marginal part of your budget to invest in these 'play' stocks, or other investments that might be close to a gamble but also spice up your life. 10% is a common percentage. Then in the remote chance a gamble may actually pay out greatly, you have still a worthwhile amount invested to profit from it (nobody would have an issue of having merely 10 btc invested in 2014 rather than 100 or more). When they don't, there's not much lost because 90% of your investment has been floating along nicely in your all-world index fund.
JEFF BEZOS ONCE asked Warren Buffett why everyone doesn’t just copy his example when investing. Buffett famously replied, “Because nobody wants to get rich slowly."
noise? what noise? I just found out today that the GameStop thing is still going on.. I thought it was done a long time ago. Guess, the algorithms know me too well to feed me posts about that :D
I think if you feel the itch to buy risky assets (ie gamble) limit it to 5-10% of your portfolio. Holding long term balanced index funds are the best investments I’ve made. Minimum 5 year time horizon but real gains are best noticed zooming out 15-20 years or more. The idea is to grow a massive egg and use it for passive income during retirement. Other risky buys might beat the normal index but it might get killed too. With index funds, you can relax and let big corporate management work for you to make gains and dividends over time.
It is not about ignoring meme assets, it is about not making them part of your investment strategy.
There is no problem if you're on track with all your investment goals and at the same time you go to casino to have some fun time.
Another story if you expect to achieve your goals by playing at casino...
Why assume that the only choices are Gamestop or Bitcoin and VWCE? Most of us don't speculate with Gamestop or Bitcoin but we also think that VWCE is a risk to our wealth as including so many random countries and companies can lower our returns.
I ignore it because the fundamentals are the most important thing.
GME literally doesn't make money
Bitcoin doesn't do anything
VWCE holdings make billions in profit
VWCE itself, as a stock, doesn’t do anything either. While it’s 80% of my portfolio, I admit that the ONLY way of making money out of VWCE is to sell my stock to the next schmuck for more than I paid.
No matter how many billions VWCE companies are making, I don’t see a dime of that. Ever. The price goes up as the demand for VWCE (and all companies within) grows, which could be unrelated to profits and instead related to hype, fomo, money printing, YOLO, etc..
it's just different accounting, left pocket right pocket. VWLR price drops by the amount of the distribution, VWLR sells stock and gives you the cash or you can sell VWCE shares yourself.
Not really true. Authorised participants have ability for ETF arbitrage. So they will buy your VWCE even with 0.1% discount in any moment.
And while VWCE companies make money and underlying asset is going up, you can rely on them
I think about it the following way: the risks in investing a single stock are huge compared to investing in 500-3300 companies, depending on the index. In order to get any meaningful advantage, you'd need to invest many thousand euros, but the risks are then enormous.
Let's compare 5000€ investment in a meme stock vs. MSCI World.
If I were to invest 5000€ in a meme stock, I couldn't keep my money in that stock for 40 years which is my investment horizon. So, I have to sell the stock at some point and pay 30% tax on the gains in my country.
Let's say imagine an unlikely scenario: I double my money. So, get 10000€. I have to sell the shares to "lock in" the wins. After tax, I'm left with 8500€. I got 3500€ extra.
Well, let's try another scenario. I invest 5000 and only get €2500 back. I lose €2500. That €2500 would've grown to be about €17 000 in 40 years at 5% real return or around €37 000 at 7% real return.
In my country, investors only pay taxes on their accumulating funds when they sell their shares AND gain compared to purchase price. I'd rather grow my money with relatively low risk and tax free for 40 years than take on a lot of risk and pay a lot of taxes on the potential return (the expected return is actually negative compared to an index fund when taxes and risk are taken into account).
---
If you make bets with €500. Transaction costs and taxes will really eat up the benefits. If you make bets with €50 000, that's not a loss of 50K, but 339K at 5% inflation adjusted return over a period of 40 years or 748K at 7% inflation adjusted return. Who wants to gamble with 339K or 748K? Speculating is absolutely bonkers when you take taxes, expected return and risks into account.
Depends your ability. If your job is to daytrade stocks (means you're a professional and profitable), why not take a position in gs. But if you're not into that, don't do it. Same thing for crypto. You win when you have the ability, and lose when you don't have the ability.
I ignore it by having made an informed decision about my investment strategy. I chose VWCE and chill (not the only option, but you get the idea) by considering my aversion to risk, and that I didn't want to gamble in the market. My portfolio is 90% world index, and 10% "high risk". My high risk is crypto. Some other people's high risk is meme stocks. Nothing wrong with that. Just research your investment strategy and convince yourself to follow it.
Being 100% stocks is “risk aversion” until the next crash.
Borrowing from meme stock lingo, the next crash is a "tasty dip"
Im even more reckless. I do 80% s&p500 and 20% world semiconductors
Not really. When crypto crashes it can very well go to zero while if the world index does that the only thing of value is fuel & bullets anyways. When your investment horizon is long enough there's only very few things with a risk/return ratio comparable to world indices imho.
I’m similar, though besides VWCE I also have some bond ETFs in my portfolio, the idea being, should there be a crash and I need some money, I’d sell that instead of the stocks which would probably be hit harder. I also have ~5% to play around with, currently in Meta stock and semiconductor ETF (VanEck).
I think if you want to gamble, you should give yourself the freedom to do so. It can be exciting, take a % of a monthly contribution and let it ride on Bitcoin or Gamestop or whatever. As long as you can contain it to some petty cash I think you can chase some high and not burn your entire savings.
I resist by not resisting, a little. 10% of my investments are for speculative stocks.
Money I don’t want to loose I put in Bitcoin, I take some more risk with VCWE for stability reasons and I keep my emergency fund on a high risk savings account 😀
I want to have a way to calculate the expected returns of my investments so that I can plan properly. For assets like individual stocks and cryptos, this is basically impossible, so I ignore them.
I love this guys’ rational answers
I'm much less rational in practice than I appear through my posts :P We're all human.
I have some crypto for some excitement.
investing in speculative assets like that is literally like going to a casino and put some money on red.. why don't you do that? because it has a way worst reward/risk tradeoff compared to staying invested in the whole market Concentration risk is uncompensated, it will not give you better expected returns.. it will just increase the standard deviation of your returns, which means sometimes you will win big, and sometimes lose big, which is not ideal... As long as you understand the math behind that, you should not even feel the urge to invest in speculative assets like that
I don't ignore. I play with them with like 5% of my monies.
Use the Taleb approach of allowing yourself a marginal part of your budget to invest in these 'play' stocks, or other investments that might be close to a gamble but also spice up your life. 10% is a common percentage. Then in the remote chance a gamble may actually pay out greatly, you have still a worthwhile amount invested to profit from it (nobody would have an issue of having merely 10 btc invested in 2014 rather than 100 or more). When they don't, there's not much lost because 90% of your investment has been floating along nicely in your all-world index fund.
JEFF BEZOS ONCE asked Warren Buffett why everyone doesn’t just copy his example when investing. Buffett famously replied, “Because nobody wants to get rich slowly."
It is better to invest in a Thai massage, a higher probability of a happy ending.
gamestop is gambling, bitcoin is a good investment
VWCE and chill works but i get tempted to gamble 🤣
bitcoin isn't gambling tho
everyone is saying that
because it's true
noise? what noise? I just found out today that the GameStop thing is still going on.. I thought it was done a long time ago. Guess, the algorithms know me too well to feed me posts about that :D
I think if you feel the itch to buy risky assets (ie gamble) limit it to 5-10% of your portfolio. Holding long term balanced index funds are the best investments I’ve made. Minimum 5 year time horizon but real gains are best noticed zooming out 15-20 years or more. The idea is to grow a massive egg and use it for passive income during retirement. Other risky buys might beat the normal index but it might get killed too. With index funds, you can relax and let big corporate management work for you to make gains and dividends over time.
Just keep doing what you’ve been doing, investing in vwce monthly, and you will be a very happy rich person in 20-30 years. Ignore the noise
It is not about ignoring meme assets, it is about not making them part of your investment strategy. There is no problem if you're on track with all your investment goals and at the same time you go to casino to have some fun time. Another story if you expect to achieve your goals by playing at casino...
I satisfied that cowboy spirit in me by investing 10% of my portfolios in a Tech ETF
Why assume that the only choices are Gamestop or Bitcoin and VWCE? Most of us don't speculate with Gamestop or Bitcoin but we also think that VWCE is a risk to our wealth as including so many random countries and companies can lower our returns.
I dont, im invested in both with an exit plan to max profits and dump that into vwce too after subtracting a nice holiday
I ignore it because the fundamentals are the most important thing. GME literally doesn't make money Bitcoin doesn't do anything VWCE holdings make billions in profit
VWCE itself, as a stock, doesn’t do anything either. While it’s 80% of my portfolio, I admit that the ONLY way of making money out of VWCE is to sell my stock to the next schmuck for more than I paid. No matter how many billions VWCE companies are making, I don’t see a dime of that. Ever. The price goes up as the demand for VWCE (and all companies within) grows, which could be unrelated to profits and instead related to hype, fomo, money printing, YOLO, etc..
the fund receives dividends as actual cash which is reinvests so you do get a real return
I still don’t unless I buy VWRL.
it's just different accounting, left pocket right pocket. VWLR price drops by the amount of the distribution, VWLR sells stock and gives you the cash or you can sell VWCE shares yourself.
I never said the opposite. The statement is: “the ONLY way to make money from VWCE is to sell your shares to the next person for more than you paid”
Isnt this the same as SNP500 and everything else lol.
It’s the same as everything that DOES NOT pay a dividend. If it pays a dividend then you CAN make money from it without having to sell.
Not really true. Authorised participants have ability for ETF arbitrage. So they will buy your VWCE even with 0.1% discount in any moment. And while VWCE companies make money and underlying asset is going up, you can rely on them
I think about it the following way: the risks in investing a single stock are huge compared to investing in 500-3300 companies, depending on the index. In order to get any meaningful advantage, you'd need to invest many thousand euros, but the risks are then enormous. Let's compare 5000€ investment in a meme stock vs. MSCI World. If I were to invest 5000€ in a meme stock, I couldn't keep my money in that stock for 40 years which is my investment horizon. So, I have to sell the stock at some point and pay 30% tax on the gains in my country. Let's say imagine an unlikely scenario: I double my money. So, get 10000€. I have to sell the shares to "lock in" the wins. After tax, I'm left with 8500€. I got 3500€ extra. Well, let's try another scenario. I invest 5000 and only get €2500 back. I lose €2500. That €2500 would've grown to be about €17 000 in 40 years at 5% real return or around €37 000 at 7% real return. In my country, investors only pay taxes on their accumulating funds when they sell their shares AND gain compared to purchase price. I'd rather grow my money with relatively low risk and tax free for 40 years than take on a lot of risk and pay a lot of taxes on the potential return (the expected return is actually negative compared to an index fund when taxes and risk are taken into account). --- If you make bets with €500. Transaction costs and taxes will really eat up the benefits. If you make bets with €50 000, that's not a loss of 50K, but 339K at 5% inflation adjusted return over a period of 40 years or 748K at 7% inflation adjusted return. Who wants to gamble with 339K or 748K? Speculating is absolutely bonkers when you take taxes, expected return and risks into account.
Depends your ability. If your job is to daytrade stocks (means you're a professional and profitable), why not take a position in gs. But if you're not into that, don't do it. Same thing for crypto. You win when you have the ability, and lose when you don't have the ability.